Wednesday, 11 July 2012

Diamond walks away with two million quid

This weekend was a time for financial settlements. Katie Holmes settled with Tom Cruise while Bob Diamond squared things away with Barclays. I wonder who did better financially? Katie or Bob?

We know how much Bob received. He walked away with two million. He received that princely sum as a going-away gift from Barclays.

He left the bank in a parlous state. Since 2007, the share prices has crashed from $60 to $10. The LIBOR fixing scandal has destroyed the Bank's reputation. The Serious Fraud Squad is sniffing around, looking to build up a criminal prosecution. Meanwhile, over in America, hungry lawyers are ready to tear the Bank apart with litigation.

If this litany of disaster wasn't enough, we found out yesterday that the FSA had grave reservations about Bob Diamond's leadership at Barclays. Lord Turner, FSA chairman, described “the cumulative impression created by a pattern of behaviour over the past few years”, during which Barclays overused “complex structures” and took an "aggressive” stance on rules and regulations. It turns out that this aggressive stance towards regulation included misrepresenting LIBOR.

The irony is that the Barclays board think that they have held Mr.Diamond to account. After all, he was meant to receive £20 million in various bonuses. However, the Barclays board found a way to hold back £18 million. Of course, £20 million is better than £2 million, but in the grand scheme of things, does that kind of loss really matter to a man that has already trousered over £100 million since he became head of the bank?

The great lesson from all of this is that there is no accountability anymore. A CEO can run a bank into the ground and still walk away with a multi-million pound settlement. That is how it works in Britain today.